2018 ANNUAL REPORT - Central Bank of Nigeria COD Annual... · 2019-10-15 · pieces of ₦500...

ANNUAL REPORT

2018

CURRENCY OPERATIONS

DEPARTMENT

COD 2018 ANNUAL REPORT

2

VISION: To Promote and Sustain an Optimal Currency Management

System

MISSION: To be Proactive in the

Management of the National Currency and

the Distribution of Foreign Currency

MANDATE: Issuance and Management of

Legal Tender Currency in Nigeria

EDITORIAL TEAM

Editor-in-Chief – Mrs. P.E. Eleje

Managing Editor - Mr. C.O. Buari

Editors - Mr. B.I.C. Maduagwu & Mrs. A. Abdulmalik

Associate Editors - Mr J.J. Laburta, Mr. I.Y. Aliyu

Members - Mr. U.S. Usman , Mrs. E.O. Offiong, Mrs. U.M. Ali , Mrs. O.T. Sunmonu, Mr.

O.G. Ajibola , Mr C.C. Ohaji, Ms. O.M. Ogundana & Ms. A. Umar-Faruk

CONTENTS

I. FOREWORD……………………………………………………………………………………………..……..4II. PREFACE…………………………………………………………………………………..........................5III. CURRENCY OPERATIONS DEPARTMENT ORGANOGRAM………............................7IV. EXECUTIVE SUMMARY…………………………………………………………………………………….8V. ACHIEVEMENTS……………………………………………………………………………………............81.0 CURRENCY OPERATIONS………………………………………………………………………............151.1 CURRENCY INDENT…………………………………………………………………………..................151.2 CURRENCY SUPPLY……………………………………………………………………………………….....191.3 COST OF PRINTING BANKNOTES……………………………………………….........................221.4 INSTITUTIONAL DEVELOPMENTS…………………………………………………………............241.4.1 NIGERIAN SECURITY PRINTING & MINTING (NSPM) PLC………………………............241.4.2 TAWADA LIMITED………………….…………………………………………………….....................251.5 STOCK OF CURRENCY NOTES ………..………………………………………………………….......261.6 CURRENCY DISTRIBUTION ACTIVITIES …………………………………………………….........281.7 COST OF CURRENCY DISTRIBUTION………………………………………………………………..321.8 PROCUREMENT, DISBURSEMENT & DISTRIBUTION OF FOREIGN

CURRENCIES ……………………………..……………………………………………………………………331.9 CURRENCY-IN-CIRCULATION (CIC) ……………………………………………………………….…331.10 CURRENCY PROCESSED AND AUDITED ……………………………………………………….....361.11 SHORTAGES DISCOVERED FROM CURRENCY PROCESSING……………………………..381.12 CURRENCY NOTES DISPOSED ………………………………………………………………………...391.13 COST OF CURRENCY DISPOSAL………………….…………………….………………………………401.14 MUTILATED NOTES DISPOSED AND REPLACED ……………………………………………...411.15 COUNTERFEIT NOTES DISCOVERED ………………………………………………………………..422.0 CURRENCY OPERATIONS’ OUTSOURCING POLICY ………………….……………………...442.1 OUTSOURCING OF THE MAINTENANCE OF CURRENCY PROCESSING

AND DISPOSAL EQUIPMENT………………………………………………………………………....443.0 CLEAN NOTE POLICY …………………........................................................................454.0 NIGERIAN CASH MANAGEMENT SCHEME ………………………………........................465.0 INCOME AND EXPENDITURE PROFILE….………………………………………………………...475.1 INCOME PROFILE…………………………………………………………………………………………...475.2 EXPENDITURE PROFILE…...……………………………………………………………………………..476.0 CURRENCY MUSEUM……………………………………………………………………………………..497.0 ISSUES AND CHALLENGES………………………………………………............…………………..508.0 PROSPECTS/THE WAY FORWARD……………………………………………………………………50


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I FOREWORD

The issuance of legal tender currency in Nigeria is one of the core mandates of the Central

Bank of Nigeria (CBN). The Currency Operations Department (COD) is responsible for

executing this mandate, as well as the procurement and distribution of foreign currency

banknotes.

During the year under review, the Department enhanced the currency management

processes through the implementation of several initiatives towards ensuring efficiency in

meeting public demand for banknotes. These included: the development of the Clean

Notes Policy and Banknotes Fitness Guidelines; tiered pricing for the processing of lower

denomination banknotes; sustained early communication of the 2019 Annual Indent to

Nigerian Security Printing & Minting (NSPM) PLC by August, 2018. In addition, the

Department sustained efforts of outsourcing the retail functions of the cash management

value chain and continued collaboration with key stakeholders for the implementation of

the Nigerian Cash Management Scheme (NCMS).

Consequently, I commend staff of the Department for their outstanding commitment and

diligence in the execution of the mandate of the Bank.

This annual publication is expected to provide useful information on critical currency

management issues in Nigeria, as well as the efforts being made to address them.

Adebisi F. Shonubi

Deputy Governor, Operations


4

II PREFACE

The Currency Operations Department (COD) 2018 Annual Report captures the activities

and initiatives of the Department to ensure, amongst others, withdrawal of unfit

banknotes and circulation of clean banknotes in a balanced denominational mix, to meet

public demand. These comprised production of banknotes, quality assurance,

distribution, processing and disposal. Furthermore, the Department continued direct

disbursement of lower denomination banknotes to merchants, shopping malls, stores,

supermarkets, receipt and authentication of foreign exchange deposits by Deposit

Money Banks (DMBs), recycling of banknotes waste to reduce the Bank’s carbon

footprints, as well as the automation and modernization of currency management to

minimize human intervention and usher in a regime of efficient and secure cash

handling.

Additionally, the Bank continued to pursue the policy of outsourcing of currency

processing and distribution under the Nigerian Cash Management Scheme (NCMS), in

furtherance to the achievement of its mandate.

There are eight (8) chapters in this report. Chapter one (1) addresses currency indent,

supply, cost etc., while Chapter two (2) presents the status of the CBN’s currency

outsourcing policy. Chapter three (3) discusses the Bank’s Clean Note policy and

Banknote Fitness Guidelines. Chapter four (4) highlights the Nigerian Cash Management

Scheme, while the income and expenditure of the Department are covered in Chapter

five (5). Chapter six (6) presents the activities of the Currency Museum.


5

Chapter seven (7) covers some of the operational challenges encountered during the

year under review, while Chapter eight (8) concludes the report with prospects and the

way forward.

On behalf of the staff of the Department, I wish to express my appreciation to the

Management of the Bank for providing the needed support towards the achievement

of the Department’s mandate. I also commend the staff of the Department for their

hard work and commitment, which have made these achievements possible.

Priscilla E. Eleje (Mrs.)

Director, Currency Operations Department


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III CURRENCY OPERATIONS DEPARTMENT ORGANOGRAM


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Director

Planning & Development Division

Currency Policy & Development Office

Planning & Logistics Office

Currency Museum Office

Currency Services Division

Currency Processing & Relationship Mgt

Office

Distribution Management Office

Foreign Currency Office

Operations Management Division

Mint Inspectorate Office, Lagos

Currency Disposal Office

Mint Inspectorate Office, Abuja

Administration

IV EXECUTIVE SUMMARY

The issuance of legal tender currency is one of the core mandates of the Central Bank of

Nigeria (CBN), as enshrined in section 2(b) of the CBN Act 2007. The Currency Operations

Department (COD) executes this mandate, as well as the procurement and distribution of

foreign currencies.

During the year, the Department continued to implement the five (5) strategic objectives to

achieve the mandate and align with the corporate goal. The objectives were: improvement

of cash management operations; provision of quality banknotes; to excel at CBN currency

operations’ efficiency; effective monitoring of registered cash-in-transit and cash sorting

companies, as well as the achievement of a high level of public awareness on currency

issues.

V ACHIEVEMENTS

In 2018, the Department recorded significant progress in the accomplishment of its strategic

objectives, which included: development of a Clean Notes Policy and Banknote Fitness

Guidelines; the tiered pricing for the processing of lower denomination banknotes,

increased volume of issuable banknotes and effective distribution of banknotes; registered

more Cash-In-Transit (CIT) and Cash Processing Companies (CPC), which encouraged private

sector participation; commissioning of the temporary exhibition “Naira Our National Pride”

for public enlightenment on banknote basic security features; development of the Cash

Activity Reporting Portal (CARP) for transmission of financial industry currency management

data to Nigeria Inter-Bank Settlement System (NIBSS); approval granted by management for

the establishment of mobile courts, in collaboration with Legal Services Department (LSD),

for the speedy prosecution of suspects apprehended for currency-related offences; and a

pilot run on recycling of banknotes waste into re-usable materials to reduce its carbon

footprints and comply with environmental sustainability practices.

8



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The Department sustained early communication of the 2019 currency indent to NSPM PLC

by August, 2018 and the receipt and authentication of foreign currency deposits by Deposit

Money Banks (DMBs), which generated significant income and reduced foreign exchange

procurement; initiated the Banknote Tracking System to curb the sale of banknotes issued

by CBN; automation and modernization of currency handling infrastructure at the CBN

Branches; and incentive-driven training scheme for currency processing operators and

Branch Controllers. The Department also trained staff to enhance capacity for efficient

service delivery.

The direct disbursement of lower denomination banknotes to merchants, shopping malls,

stores, supermarkets etc, in response to public outcry over the dearth of lower

denomination banknotes in circulation, was also sustained during the review period.

Furthermore, in its bid to minimize human intervention and usher in a regime of enhanced

efficiency and secure cash handling in line with the Bank’s vision and best practice, the

Bank commenced the process of modernization and automation of cash management at

the Branches, and the implementation will be on a pilot basis starting with three Branches,

namely: Asaba, Abuja and Abeokuta.

CURRENCY INDENT, SUPPLY AND COST

The Bank approved an indent of 3,351.34 million pieces of banknotes of various

denominations in 2018 to meet the currency needs of the economy, 25.3 per cent higher

than the level in the preceding year. The Nigerian Security Printing and Minting (NSPM) Plc

was awarded the contract for the production of the entire indent. The NSPM Plc delivered

2,653.31 million pieces or 79.2 percent of the total, with an outstanding balance of 698.03

as at end-December, 2018. In addition, the company, under a domestication arrangement,

delivered 22.89 million pieces of Nigeria’s N100 commemorative centenary banknote,

awarded in 2014 to Crane Currency Sweden. As at December 31st 2018, a cumulative total

of 992.50 million pieces or 99.3 percent had been delivered.

Furthermore, the Management of the Bank approved the procurement of 2.42 million

pieces of ₦500 denomination Banknotes produced by NSPM PLC in 2012 at a negotiated 50

per cent discount price of ₦15,498,690.00.

The Department expended the sum of N64,040.78 million on printing of banknotes in 2018,

compared with ₦49,524.96 million in the corresponding period of 2017, indicating an

increase of ₦14,515.82 million.


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STOCK OF CURRENCY NOTES

The total stock of currency (issuable and non-issuable) in the vaults of the Bank as at

the end of December 2018 stood at 1,718.57 million pieces, compared with 1,284.10

million pieces in 2017, indicating an increase of 33.83 percent. As at end-December

2018, the total issuable notes (newly printed notes and Counted Audited Clean notes)

stood at 496.61 million pieces, compared with 256.61 million pieces in 2017,

indicating an increase of 240 million pieces or 94.0 percent. The increase was

attributed to the volume of new notes supplied by NSPM PLC.

CURRENCY DISTRIBUTION

The Department evacuated a total of 265,553 boxes of banknotes valued at

N1,841,937.00 million from the NSPM PLC. Lagos and Abuja factories to various

Branches in 2018. The currency evacuated increased by 49,700 boxes or 23.03

percent and N19,228 million or 3.88 percent in volume and value terms respectively,

compared with 215,853 boxes valued at N495,085.00 million in 2017. The increase

was attributed to the evacuation of more banknotes in 2018, compared with the

volume in 2017. A total of 852,593 boxes valued at N3,504.34 billion was distributed

across the Branches in 2018. This indicated an increase of 28.27 percent and 32.02

percent in volume and value terms respectively, compared with 664,679 boxes valued

at N2,654.38 billion in 2017.

A total of USD2,400 million was procured in 2018, out of which USD1,800 million was

supplied to Lagos Branch and the balance of USD600,000 million to Abuja Branch for

distribution to other Branches. This was used to fund the operations of Bureaux De

Change (BDCs), payment of estacode allowances to Ministries, Departments and

Agencies (MDAs), pilgrimages and Personal Travel Allowances (PTAs).


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CURRENCY-IN-CIRCULATION (CIC)

Currency-in-Circulation grew by 0.8 percent to N2,329.7 billion at end -December 2018. The

growth in CIC reflected the high dominance of cash in the economy and increase in

economic activities. A breakdown of the CIC indicated that, in terms of volume and value,

the proportion of higher denomination banknotes (N100, N200, N500 and N1000) in total

rose from 41.9 to 44.3 percent and 96.9 to 97.6 percent, respectively. The lower

denomination currency notes continued to be preponderant in terms of volume,

constituting 55.7 percent of the total. In value terms, it constituted 2.4 percent of the total

banknotes. The ratio of CIC to nominal GDP, which measures the moneyness of the

economy, fell slightly by 0.1 percentage point to 1.8 percent in 2018. The decline in the

CIC/GDP ratio reflected increased usage of e-payment products such as electronic payment

cards.

CURRENCY PROCESSED AND AUDITED

In 2018, a total of 266,578 boxes valued at N1,561,940.00 million was processed, compared

with 258,007 boxes of banknotes valued at N1,481,414.00 million in 2017, indicating an

increase of 8,571 boxes or 3.32 percent or N80,526.00 million.

COUNTERFEIT NOTES DISCOVERED

To maintain the integrity of the banknotes in circulation, the Department, in collaboration

with DMBs, Bankers Warehouse PLC. and security agencies, continued to intensify its efforts

at mitigating the incidences of counterfeiting during the period under review. A total of

119,663 pieces of counterfeit notes with a nominal value of N98.82 million was recorded in

2018. This indicated a decline of 1.30 percent in volume terms and an increase of 5.77

percent in value terms, when compared with 118,126 pieces with a nominal value of N93.43

million recorded in the corresponding period of 2017. The ratio of counterfeit notes to

volume of banknotes in circulation was 18 pieces per million, compared to 16 pieces per

million banknotes discovered in 2017. The N500 and N1000 denominations remained the

most commonly counterfeited banknotes, which accounted for 65.29 percent and 34.49

percent respectively of the total counterfeit notes discovered.


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CURRENCY DISPOSAL

As at the end of December 2018, a total of 1,810.54 million pieces or 181,054 boxes

valued at N915,075.17 million was disposed, compared with 2,575.18 million pieces or

257,501 boxes valued at N977,231.78 million disposed in 2017. The boxes of unfit notes

disposed in 2018 decreased by 76,447 boxes, while the value decreased by N62,156.62

million or 6.36 percent compared with 257,501 boxes valued at N977,231.78 million

disposed in 2017.

INCOME AND EXPENDITURE PROFILE

The Department generated an income of N7,954.33 million from penal charges on

unsorted banknotes deposited by DMBs and charges for authentication of foreign

currency deposits with the Bank. The amount represented an increase of N3,143.69

million compared with N4,810.64 million earned in 2017. The increase could be attributed

to the additional income earned from the authentication and processing of foreign

currency deposits by DMBs.

The Department expended a total of N73,582.90 million on currency operations in 2018,

representing an increase of N16,550.34 million or 29.02 percent, compared with

N57,032.56 million in 2017. Of the total expenditure, N70,800.00 million or 96.22 percent

was incurred on CIE recurrent, N2,708.23 million or 3.68 percent on CIE capital and Non-

CIE items accounted for the balance of N74.67 million, or 0.10 percent.


13

ISSUES AND CHALLENGES

The Department was confronted with a number of operational challenges, which included:

sale of newly minted Naira notes; poor handling habits of banknotes by the public;

hoarding of the Naira and high cost of currency management. Other constraints were rising

incidences of counterfeiting of the higher denomination banknotes; public apathy in the

usage of coins; disposal of banknotes waste in an eco-unfriendly manner, and banknotes

inter-leafing and other shortages discovered in the deposits of DMBs and Bankers

Warehouse.

PROSPECTS AND THE WAY FORWARD

To address the above challenges, the Department will sustain efforts to conduct

operational research and benchmark best practices to improve Currency Operations

Management. The Department will continue collaboration with security agencies to

mitigate the sale of newly minted Naira banknotes, through sting operations and other

activities.

Furthermore, the Department will sustain its intervention in addressing the sub-optimal

circulation of lower denomination banknotes through adequate supply and distribution in

collaboration with DMBs. Also, the recycling of banknotes waste to reduce the carbon

footprints will remain a major focus of the Department. To stem the tide of sale of newly

minted Naira notes, curb counterfeiting and poor handling of the Naira notes, the

Department will continue to strengthen its collaboration with relevant stakeholders in the

Harmonized Publicity Campaign and leverage the cashless policy.


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The Department has commenced the process for the establishment of a Currency

Laboratory to facilitate adjudication, banknotes evaluation and other tests for quality

improvement. The Department will continue to engage the NSPM PLC to facilitate timely

delivery of the indent, liaise with the Bankers’ Committee and the Committee of Heads of

Bank Operations (CHBO) for DMBs, to strengthen their internal control mechanisms. This

is with a view to minimize the incidences of shortages, deliberate mutilation, inter-leafing

and counterfeits discovered during currency processing.

1.0 CURRENCY OPERATIONS

1.1 CURRENCY INDENT

The currency indent approved for 2018 was 3,351.34 million pieces of various banknote

denominations, valued at N1,451,180.60 million, compared with 2,674.49 million pieces

valued at N1,281,498.55 million in 2017. This indicated an increase of 25.31 percent and

13.24 percent in volume and value terms respectively. NSPM PLC was awarded with the

production of the entire indent. To enhance the level of issuable banknotes, the Bank

approved the procurement of 2.42 million pieces of ₦500 denomination banknotes,

produced by NSPM PLC in 2012, at a negotiated 50 percent discounted price of

₦15,498,690.00.

Furthermore, the company, under a domestication arrangement, delivered 22.89 million

pieces of the Nigeria’s ₦100 commemorative centenary banknote, awarded in 2014 to

Crane Currency Sweden. As at December 31st 2018, a cumulative of 992.50 million pieces

or 99.3 percent had been delivered. (Tables 1.1.1-1.1.2 and Figures 1.1.1-1.1. 4).


15

Table 1.1.2 CURRENCY INDENT: VOLUME & VALUE (2017-2018)


16

VOLUME

(MILLION

PIECES)

1,000 845.79 845,790.00 731.55 731,550.00 -13.51 -13.51

₦500 643.31 321,655.00 1173.5 586,750.00 82.42 82.42

₦200 384.45 76,890.00 441.14 88,228.00 14.75 14.75

₦100 256.3 25,630.00 226.95 22,695.00 0.00 0.00

₦50 128.15 6,407.50 304.97 15,248.50 137.98 137.98

₦20 160.19 3,203.80 247.78 4,955.60 54.68 54.68

₦10 128.15 1,281.50 125.25 1,252.50 -2.26 -2.26

₦5 128.15 640.75 100.2 501.00 -21.81 -21.81

TOTAL 2,674.49 1,281,498.55 3,351.34 1,451,180.60 25.31 13.24

DEN.

2017 INDENT 2018 INDENT % CHANGE

VALUE

(₦’ MILLION)

VOLUME

(MILLION

PIECES)

VALUE

(₦’ MILLION) VOLUME VALUE

Source: Planning & Logistics Office

TABLE 1.1.1: ₦500 DENOMINATION BANKNOTES PRODUCED IN 2012 AND DELIVERED

AS AT 31ST DECEMBER 2018

DenominationQuantity

Approved

DeliveryOutstanding Balance

Pieces %

₦500242,000,000 242,000,000

100.00% -

Source: CBN Mint Inspectorate Office

Figure 1.1.1 CURRENCY INDENT IN VOLUME (2017 & 2018)

Figure 1.1.2 CURRENCY INDENT IN VALUE (2017 & 2018)


17

0

200

400

600

800

1000

1200

1400

1,000 500 200 100 50 20 10 5

VO

LUM

E

DENOMINATION

2017 INDENT VOLUME

2018 INDENT VOLUME

0.00

100,000.00

200,000.00

300,000.00

400,000.00

500,000.00

600,000.00

700,000.00

800,000.00

900,000.00

1,000 500 200 100 50 20 10 5

VA

LUE

DENOMINATION

2017 INDENT VALUE

2018 INDENT VALUE

Year Indent in Vol. (Million Pieces) Indent in Value ( ₦ Million)

2014 1,760.09 377,443.90

2015 2,042.89 797,048.00

2016 2,079.02 840,596.80

2017 2.674.49 1,281,498.55

2018 3,351.34 1,451,180.60

Table 1.1.3 CURRENCY INDENT ORDERED FROM NSPM PLC. VOLUME & VALUE (2014-2018)

Figure 1.1.3 CURRENCY ORDERED FROM NSPM PLC (2014-2018)


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1.2 CURRENCY SUPPLY

Out of the total order of 3,351.34 million pieces of banknotes, the NSPM PLC.

delivered 2,653.31 million pieces or 79.17 percent as at the end of December 2018,

leaving a balance of 698.03 million pieces or 20.83 percent. In addition, the company,

under a domestication arrangement, delivered 22.89 million pieces of Nigeria’s ₦100

commemorative centenary banknote, awarded in 2014 to Crane Currency Sweden. As

at 31st December 2018, a cumulative of 992.50 million pieces or 99.3 percent had

been delivered. However, NSPM PLC had written to inform the Bank that the balance

of 7,460,000 pieces was part of waste generated during the printing process involved

in the domestication.

Furthermore, the Management of the Bank approved the procurement of 2.42 million

pieces of ₦500 denomination Banknotes produced by NSPM PLC in 2012, at a

negotiated 50.0 percent discounted price of ₦15,498,690.00.


19Source: Planning & Logistics Office

TABLE 1.1.1 2012 ₦500 DENOMINATION BANKNOTES DELIVERED TO CBN AS AT 31ST DECEMBER

2018

DenominationQuantity Approved To

Be Accepted

Quantity Delivery Outstanding

BalancePieces %

₦500 242,000,000 242,000,000 100.00% -


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Table 1.2.2 N100 COMMEMORATIVE BANKNOTES ORDERED FROM CRANE CURRENCY OF SWEDEN IN 2014-2018


Table 1.2.3 DELIVERIES BY NSPM PLC IN 2018 (IN MILLION PIECES)

The NSPM PLC. delivered a total of 2,653.31 million pieces of or 79.17 percent as at the end of December 2018. banknotes

Quantity Ordered Cumulative Delivery Position Outstanding Balance Cumulative Delivery

1,000,000,000

As At Year End 2014 50,000,000.00 950,000,000.00

99.25%

As At Year End 2015 811,550,000.00 188,450,000.00

As At Year End 2016 899,690,000.00 100,310,000.00

As At Year End 2017 969,650,000.00 30,350,000.00

As At 28th January, 2018 992,540,000.00 7,460,000.00

DENOMINATIONNSPM PLC APPROVED

ORDER IN 2018

NSPM PLC DELIVERY

POSITION IN 2018

₦1000 731,550,000 474,400,000

₦500 1,173,500,000 960,080,000

₦200 441,140,000 323,340,000

₦100 226,950,000 117,290,000

₦50 304,970,000 304,970,000

₦20 247,780,000 247,780,000

₦10 125,250,000 125,250,000

₦5 100,200,000 100,200,000

TOTAL 3,351,340,000 2,653,310,000

Table: 1.2.4: BANKNOTES ORDER AND DELIVERY FROM NSPM PLC IN MILLION PIECES (2017-2018)

YEAR ORDER

CUMULATIVE

DELIVERY

OUTSTANDING

BALANCE

CUMULATIVE

DELIVERY %

2014 1,760.06 1,144.02 616.07 65.00

2015 2,042.89 1,646.44 396.45 80.59

2016 2,079.02 1,648.26 430.76 79.28

2017 2,674.49 1,944.19 730.30 72.69

2018 3,351.34 2,653.31 698.03 79.17

Table 1.2.5 BANKNOTES ORDER AND DELIVERY IN MILLION PIECES (2014-2018)


21

DEN. ORDER

FOR 2017

DELIVERY

IN 2017

ORDER

FOR 2018 DELIVERY IN 2018

CUMULATIVE

DELIVERY

OUTSTANDING

BAL. DECEMBER

2018

1000 845.79 371.80 731.55 474.40 64.85% 257.15

500 643.31 643.31 1173.5 960.08 81.81% 213.42

200 384.45 384.45 441.14 323.34 73.30% 117.80

100 256.30 0 226.95 117.29 51.68% 109.66

50 128.15 128.15 304.97 304.97 100.00% -

20 160.19 160.18 247.78 247.78 100.00% -

10 128.15 128.15 125,25 125.25 100.00% -

5 128.15 128.15 100.2 100.20 100.00% -

TOTAL 2,674.49 1,944.19 3226.09 2,653.31 79.17% 698.03



1.3 COST OF PRINTING BANKNOTES

The Department expended the sum of N64,040.78 million on printing of banknotes in

2018, compared with ₦49,524.96 million in the corresponding period of 2017,

indicating an increase of ₦14,515.82 million or 29.31 percent. Furthermore, a total of

N5,630.03 million or 7.96 percent was expended on air charter, compared with

N4,022.93 million incurred during the corresponding period in 2017. The sum of

N662.21 million was expended on currency notes disposal.


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Figure 1.2.1 NSPM PLC DELIVERIES IN MILLION PIECES (2014-2018)

The cost of printing banknotes increased by 29.31 percent in 2018

Table 1.3.1 COST OF PRINTING BANKNOTES (2013-2018)

Figure 2.3.1 COST OF PRINTING BANKNOTES (2013-2018)


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Source: Admin. Office

YEAR PRINTING OF BANKNOTES (₦' MILLION)

2013 31,101.21

2014 23,134.85

2015 30,092.90

2016 33,374.02

2017 49,524.96

2018 64,040.78

COST OF PRINTING BANKNOTES

1.4 INSTITUTIONAL DEVELOPMENTS

1.4.1 THE NIGERIAN SECURITY PRINTING & MINTING (NSPM) PLC

The NSPM PLC remained the National printer of the Nigerian legal tender currency. The

company has an installed capacity to produce 4 billion pieces of banknotes per annum,

with a production plan of 3.35 billion pieces of banknotes for 2018. However, the company

produced 2.68 billion pieces of banknotes as at the end of 2018, compared with 1.97

billion during the same period in 2017.

Analysis of the production plan of the company indicated an increase of 711.80 million

pieces or 36.11 percent. The CBN and Bureau of Public Enterprises (BPE) reached an

agreement in respect of the negotiated sale of Federal Government’s shares in Nigerian

Security Printing and Minting (NSPM) Plc to Central Bank of Nigeria (CBN).

Consequently, the Bank continued to hold the majority shares of 89.52 percent in the

company, as shown by the pie chart below.


24


25

1.4.2 TAWADA LIMITED

Tawada Limited is a subsidiary of NSPM PLC, which specializes in the production of

Intaglio and Offset inks for the printing of banknotes. The company produced a total of

446,606 kg of inks as against the planned output of 380,350 kg as at the end of 2018,

resulting in an increase of 66,256 kg or 17.42 percent. The company’s report indicated

that production budgets for Intaglio and Offset inks in the period under review were

substantially met, while the average sale of Varnish and Polymer Intaglio recorded was

attributable to the high production volume of NSPM PLC, occasioned by the

commencement of production on the new line.

1.5 STOCK OF CURRENCY NOTES

The total stock of currency (issuable and non-issuable) in the vaults of the Bank as at

the end of December 2018 stood at 1,718.57 million pieces, compared with 1,284.10

million pieces in 2017, indicating an increase of 33.83 percent. As at end-December

2018, the total issuable notes (newly printed notes and Counted Audited Clean

notes) stood at 496.61 million pieces, compared with 256.61 million pieces in 2017,

indicating an increase of 240 million pieces or 94.0 percent. The increase was

attributed to the volume of new notes supplied by NSPM PLC. (Tables 1.5.1-1.5.2

and Figure 1.5.1)


26

Table 1.5.1: ANALYSIS OF STOCK OF CURRENCY NOTES IN MILLIONS (2017 & 2018)


₦1,000 20.75 149.42 170.17 1.62% 24.70 77.52 102.22 1.44%

₦500 30.92 117.28 148.20 2.41% 64.00 110.39 174.39 3.72%

₦200 106.97 53.39 160.36 8.33% 55.24 83.66 138.90 4.87%

₦100 21.33 83.34 104.67 1.66% 51.35 40.34 91.69 2.35%

₦50 17.74 83.30 101.04 1.38% 77.51 157.26 234.77 9.15%

₦20 10.20 181.90 192.10 0.79% 99.35 258.62 357.97 15.05%

₦10 20.54 191.16 211.70 1.60% 73.56 261.09 334.65 15.19%

₦5 28.16 167.70 195.86 15.25% 50.90 233.07 283.97 13.56%

TOTAL 256.61 1,027.49 1,284.10 33.04% 496.61 1,221.96 1,718.57 65.33%

Percentage of

Issuable to Total

Stock (2018)

Non-

Issuable in

Pieces

(2017)

Total in

Pieces

(2017)

Total In Pieces

(2018)

Denomi-

nations

Issuable in

Pieces (2017)

Percentage

of Issuable

to Total

Stock (2017)

Issuable in

Pieces

(2018)

Non-

Issuable in

Pieces

(2018)

Denomination Issuable in Pieces (31st Dec 2017)

Issuable in Pieces (31st Dec 2018)

Percentage Difference

₦1000 20,750,000 24,700,000 19.04

₦500 30,920,000 64,000,000 106.99

₦200 106,970,000 55,240,000 (48.36)

₦100 21,330,000 51,350,000 140.74

₦50 17,740,000 77,510,000 336.92

₦20 10,200,000 99,350,000 874.02

₦10 20,540,000 73,560,000 258.13

₦5 28,160,000 50,900,000 80.75

TOTAL 256,610,000 496,610,000 93.53

Total issuable notes (New notes and CAC) stood at 496.61million pieces as at the end of December 2018, as against 256.61 million pieces in the corresponding period of 2017.


27


Table 1.5.2: ANALYSIS OF ISSUABLE NOTES (2017-2018)

Figure 1.5.2: COMPARATIVE ANALYSIS OF ISSUABLE NOTES AS AT 31ST DEC. 2017 & 2018

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

₦1,000 ₦500 ₦200 ₦100 ₦50 ₦20 ₦10 ₦5

2017 2018


28

Table 1.6.1 SUMMARY OF EVACUATION FROM LAGOS & ABUJA NSPM PLC FACTORIES ( 2017-2018)

1.6 CURRENCY DISTRIBUTION ACTIVITIES

The Department evacuated a total of 265,553 boxes of banknotes valued at N1,041,383.60

million from the NSPM PLC Lagos and Abuja factories to various Branches in 2018. The

quantum of currency evacuated increased by 49,700 boxes or 23.03 percent and

N239,297.60 million or 29.83 percent in volume and value terms respectively, compared

with 215,853 boxes valued at N802,086.00 million in 2017. The increase was attributed to

the evacuation of more banknotes in 2018 compared with the volume in 2017.

A total of 852,593 boxes valued at N3,504.34 billion was moved across the Branches in

2018. This indicated a decline of 28.22 percent and 32.02 percent in volume and value

terms respectively, compared with 664,679 boxes valued at N2,654.38 billion in 2017.

(Tables 1.6.1-1.6.4 and Figures 1.6.1-1.6.3)

DENOMINATIONVOLUME IN BOXES

(2017)VALUE (NMILLION)

VOLUME IN BOXES (2018)

VALUE(N MILLION)

₦1000 38,493 384,930.00 46,911469,110.00

₦500 62,331 311,655.00 94,330471,650.00

₦200 39,493 78,986.00 32,17464,348.00

₦100 10,935 10,935.00 14,31814,318.00

₦50 20,372 10,186.00 30,49715,248.50

₦20 16,702 3,340.40 24,7784,955.60

₦10 13,545 1,354.50 12,5251,252.50

₦5 13,982 699.10 10,020501.00

Total215,853 802,086.00 265,553 1,041,383.60


29

Fig 1.6.1 EVACUATION WITH PERCENTAGE CHANGE (2017-2018)B

OX

ES

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

1000 500 200 100 50 20 10 5

Chart Title

2017 2018

Table 1.6.2 YEARLY DISTRIBUTION OF BANKNOTES IN BOXES (2014-2018)

YEAR 2014 2015 2016 2017 2018

BOXES 132,460 160,293 160,565 215,853 265,553

Figure 1.6.2 YEARLY DISTRIBUTION OF BANKNOTES IN BOXES (2014-2018)


30

Source: Distribution Management Office

VA

LUE

0

50,000

100,000

150,000

200,000

250,000

300,000

2014 2015 2016 2017 2018

BOXES

YEAR


31

Table 1.6.3 INTERSTATE MOVEMENT IN BOXES (2017-2018)

Fig 1.6. 3 INTERSTATE MOVEMENT IN BOXES (2017-2018 )Source: Distribution Management Office

MONTH 2017 2018 2017 2018

JANUARY 52,269 60,246 134,520 275,748

FEBRUARY 44,750 72,219 149,841 304,126

MARCH 54,319 77,406 154,802 279,745

APRIL 56,559 73,153 170,146 211,896

MAY 55,256 72,950 189,741 276,093

JUNE 55,751 67,804 197,845 354,761

JULY 47,020 77,139 226,458 389,110

AUGUST 63,098 61,282 309,629 239,781

SEPTEMBER 54,060 59,995 279,445 210,917

OCTOBER 60,344 77,947 280,710 345,137

NOVEMBER 66,260 81,925 301,134 365,524

DECEMBER 54,993 70,527 260,112 251,504

TOTAL 664,679 852,593 2,654,383.22 3,504,342

FACE VALUE (₦'Million) NO OF BOXES

1.7 COST OF CURRENCY DISTRIBUTION (2017-2018)

The Department expended the sum of N5,737.39 million on currency distribution

during the period under review, compared with the sum of N4,107.22 million in 2017.

The expenditure declined significantly by N1,630.17 million or 39.69 percent. This

was attributed to the creation and implementation of 17 currency movement hubs,

which enhanced currency movement activities with resultant cost savings for the

Bank.

Table 1.7.1 : COST OF CURRENCY DISTRIBUTION (2017-2018)

Figure 1.7.1 COST OF CURRENCY DISTRIBUTION (2017-2018)


32

YEAR (N'Million) % Change

2017 4,107.22 -

2018 5,737.39 39.69

1.8 PROCUREMENT, DISTRIBUTION AND DISBURSEMENT OF FOREIGN CURRENCIES

The Department, in collaboration with Travelex Nigeria and Innovate 1 Pay Limited, carried

out the procurement and distribution of foreign currencies during the period under review.

A total of USD2,400,000,000.00 was procured in 2018, out of which USD1,800,000,000.00

was supplied to Lagos Branch and USD600,000,000.00 to Abuja Branch, for onward

distribution to other Branches. This was used to fund the operations of Bureaux De Change

(BDCs), payment of estacode allowances to Ministries, Departments and Agencies (MDAs),

pilgrimages and Personal Travel Allowances (PTAs).

To deepen the foreign exchange market, boost liquidity and achieve convergence in the

exchange rates at the parallel and official markets, Management approved the modalities

for the deposit of USD currency notes by DMBs with the Bank for authentication and

onward credit to their offshore accounts.

As at the end of December 2018, the sum of USD5,584,477,750.00 was received and

processed/authenticated at CBN Lagos Branch.

Out of this amount, a total of USD7,764,914,275.84 was utilized for BDCs

interventions/operations, while the balance was used for the payment to MDAs and other

foreign currency requests. Thus, at the end of December 2018, USD7,984.48 million, GBP3.0

million and Euro16.29 million were disbursed, compared with USD4,496.72 million,

GBP4.44 million and Euro3.84 million disbursed in 2017.

The Department sustained its monitoring of foreign exchange sales in the Branches during

the period under review. The number of active BDCs operating in Nigeria as at the end of

December 2018, increased to 4,221 from 3,519 in 2017.

1.9 CURRENCY-IN-CIRCULATION (CIC)

The CIC increased by N17, 248 million or 0.80 percent to N2, 329,706,576.78 million in

2018, compared with N2, 157,229.65 million in 2017. The increase in CIC was due to the

2019 election and increase in economic activities.

33

Table 1.9.1: CURRENCY-IN-CIRCULATION IN VALUE & VOLUME AS AT 31ST DECEMBER 2017-2018

TABLE 1.9.2 CURRENCY-IN-CIRCULATION RATIO TO GDP: VOLUME & VALUE (2013-2018)

Year Volume (in million pieces)

Value(N’ Billion)

GDP (N’ Billion) Ratio-CIC/GDPGDP %

Change in Value

2013 7,705.90 1,776.81 80,092.56 2.22 8.89

2014 7,642.34 1,797.97 89,043.62 2.02 1.19

2015 7,596.56 1,857.94 94,144.96 1.97 3.34

2016 8,691.63 2,179.17 102,575.42 2.12 8.95

2017 9,340.64 2,157.23 114,906.66 1.88 12.02

2018 9,256.63 2,329.71 127,762.55 1.82 11.18

There was an increase of 0.80 percent in the value of CIC as at the end of December 2018.


34

Source: Planning and Logistics Office

Source: Planning and Logistics Office/ Statistics Department

Denom. (N)

2017 2018

Volume Value Volume Value

1000 1,228,837,238.88 1,228,837,238,876.00 1,297,523,810 1,297,523,810,103.00

500 1,316,567,464.17 658,283,732,087.00 1,597,988,733 798,994,366,747.00

200 664,457,680.18 132,891,536,035.00 562,900,839 112,580,167,765.00

100 705,590,178.63 70,559,017,863.00 641,245,100 64,124,509,979.00

50 608,249,061.18 30,412,453,059.00 449,423,276 22,471,163,775.00

20 1,058,807,273.65 21,176,145,473.00 1,097,840,056 21,956,901,129.00

10 1,006,817,960.73 10,068,179,607.28 797,680,120 7,976,801,200.00

5 752,153,750.60 3,760,768,753.00 494,888,883 2,474,440,414.00

2 107,566,194.00 215,132,388.00 204,379,200 408,758,400.00

1 616,489,425.20 616,489,425.20 736,079,162 736,079,162.00

0.5 580,065,192.40 290,032,596.20 681,478,816 340,739,408.11

0.25 348,233,452.80 87,058,363.20 348,250,768 87,062,691.92

0.1 315,565,795.60 31,556,579.56 315,582,866 31,558,286.56

0.01 31,244,200.00 312,442.00 31,371,969 313,719.69

Total 9,340,644,868.01 2,157,229,653,547.44 9,256,633,597 2,329,706,672,780.28

Figure 1.9.1 CURRENCY-IN-CIRCULATION (2013-2018)


35

Source: Planning and Logistics Office

0.00

500.00

1,000.00

1,500.00

2,000.00

2,500.00

2013 2014 2015 2016 2017 2018

Value (N’Billion)

Value (N’Bil l ion)

1.10 CURRENCY PROCESSED AND AUDITED

In 2018, the Department deployed various currency processing equipment and processed a

total of 266,578 boxes valued at N1,561,940.00 million. The volume of banknotes processed

increased by 8,571 boxes or 3.32 percent, while the value increased by N80,526.00 million

or 5.44 percent, compared with 258,007 boxes of banknotes valued at N1,481,414.00

million in 2017.

A further analysis of the entire processing output in 2018 revealed that a total of 134,978

boxes of CAC and 131,600 boxes of CAD valued at N1,561.940.00 million were generated

during the year under review. The CAC generated decreased by 25,836 boxes or 23.72

percent, while CAD increased by 17,265 boxes or 11.5 per cent, compared with the previous

year. (See tables 1.10.1-1.10.2)

There were no currency processing operations in Calabar, Owerri and Sokoto Branches in

2018, due to ongoing structural renovations in those Branches. However, Bauchi and Akure

Branches had disruptions in processing activities during the months of January and

February as well as July to December 2018, due to renovation work.


36

Table 1.10.1 CURRENCY PROCESSED & AUDITED (2013-2018)

CURRENCY PROCESSED CURRENCY AUDITED

YEARVOLUME (BOXES)

VOLUME (PIECES) VALUE (₦ ‘MILLION) VOLUME (BOXES) VALUE (N‘MILLION)

2013 256,499 2,564,990,000 1,748,340.00 257,734 1,775,330.00

2014 305,840 3,058,400,000 1,887,320.00 311,486 5,110,440.00

2015 476,619 4,766,190,000 2,742,543.00 - -

2016 556,629 5,566,290,000 1,679,805.00 - -

2017 258,007 2,580,070,000 1,482,414.00 - -2018 266,578 2,665,780,000 1,561,940.00 - -

Table 1.10.2 COMPARATIVE ANALYSIS OF CURRENCY PROCESSED AND AUDITED

(2017-2018)

Figure 1.10.1 ANALYSIS OF CURRENCY PROCESSED AND AUDITED: (2017-2018)

A total of 2,665.78 million pieces or 266,578

boxes of banknotes valued at N1,561,940 millionwas processed in 2018, compared with 2,580.10million pieces or 258,007 boxes of banknotesvalued at N1,482,414 million processed in 2017


37

Source: Currency Processing and Relationship Management Office

Details 2017 2018

No. Boxes Processed 258,007 266,578

No. Pieces Processed2,580,070,000 2,665,780,000

Value (N‘Million) 1,482,414 1,561,940

No. of Boxes Audited - -

CAC Boxes 109,142 134,978

CAD Boxes 148,865 131,600


38

1.11 SHORTAGES DISCOVERED FROM CURRENCY PROCESSING

In 2018, a total of N436.5 million was discovered as shortages during processing of

deposits from twenty-one (21) DMBs and Bankers Warehouse PLC. Out of the

total, ₦324.9 million or 74.43 percent of the shortages were from four (4) DMBs.

The volume of shortages discovered in 2018 decreased significantly by ₦23.02

million or 5.00 percent, compared with ₦459.52 million in 2017. The downward

trend was attributable to sustained implementation of 50 and 200 percent

penalty charges on shortages and counterfeits discovered in DMBs deposits

respectively, which propelled the DMBs to strengthen their internal control

mechanism.

Table 1.11.1 SHORTAGES DISCOVERED (2017-2018)

YEAR Total

(N Million)

% CHANGE

2017 459.52 N/A

2018 436.5 (5.27)

A total of N436.5 million shortages was discovered during currency processing of deposits from DMBs in 2018.

1.12 CURRENCY DISPOSAL

The Department sustained the banknotes disposal operations in 2018 to ensure the

circulation of clean banknotes. In pursuance of this objective, the Department deployed

twelve (12) Banknote Destruction Systems (BDS) and four (4) Currency Disintegrating

Systems (CDS) for currency disposal activities during the period under review. As at the

end of December 2018, a total of 1,810.63 million pieces or 181,054 boxes valued at

N915,075.17 million was disposed, compared with 2,575.18 million pieces or 257,501

boxes valued at N977,231.78 million disposed in 2017. The boxes of unfit notes disposed

in 2018 decreased by 76,447 boxes, while the value decreased by N62,156.62 million or

6.36 percent, compared with 257,501 boxes valued at N977,231.78 million disposed in

2017. (Tables 1.12.1 and 1.12.2 below)

Table 1.12.1 ANALYSIS OF BANKNOTES DISPOSED IN 2018 (Volume & Value)


39

Source: Currency Disposal Office

DENOMINATION (₦) BOXES VOLUME(PIECES) VALUE (₦ Million) RATIO (%)

1000 50,539 505,390,000 505,390,000,000 27.91%

500 65,641 656,410,000 328,205,000,000 36.25%

200 29,427 294,270,000 58,854,000,000 16.25%

100 18,122 181,220,000 18,122,000,000 10.01%

50 5,598 55,980,000 2,799,000,000 3.09%

20 5,972 59,720,000 1,194,400,000 3.30%

10 3,626 36,260,000 362,600,000 2.00%

5 2,129 21,290,000 106,450,000 1.18%

MUTILATED NOTES 0 0 39,236,060 0

OLD/REDESIGNED NOTES

87,101 2,479,145

TOTAL181,054 1,810,627,101 915,075,165,205 100

Table 1.12.2 ANALYSIS OF BANKNOTES DISPOSED IN VOLUME & VALUE (2014-2018)

1.13 COST OF CURRENCY DISPOSAL The sum of N662.21 million was expended on currency disposal and processing activities as at the end of December 2018, compared with N594.62 million incurred in 2017. This showed an increase of N67.59 million or 9.17 per cent. (Table 1.13.1 and Figure 1.13.1)

Table 1.13.1 COST OF NOTES DISPOSAL (2014-2018)


40


Source: The Administrator’s Office

Details 2014 2015 2016 2017 2018% Change

(2017 & 2018)

-29.69%

-6.36%

No. of

Boxes

Value

(₦'Million)

257,501

977,231

181,054

915,074

277,652 358,877232,455

956,151.46 829,9381,022,822

YearCost of Notes Disposal (N‘

Million)

Changes (year-on-year) (N‘ Million)

% Change

2014 443.53 -

2015 1,201.98 758.45 171

2016 1,437.34 235.36 19.58

2017 594.62 842.72 58.63

2018 662.21 67.59 11.37

Figure 1.13.1 COST OF NOTES DISPOSAL (2014-2018)

1.14 MUTILATED NOTES DISPOSED AND REPLACED

A total of 59,939 pieces of various denominations of mutilated banknotes valued at

N39.24 million was audited, disposed and replaced in 2018, compared with 323,555

pieces valued at N70.74 million in 2017. This indicated a decrease of 81.47 percent in

volume and a decrease of 44.53 percent in value. (Table 1.14.1)

Table 1.14.1 PAID & AUDITED MUTILATED NOTES DESTROYED (2014-2018)

A total of 59,939 pieces of mutilated currency notes valued at ₦39.24 million was disposed and replaced in 2018


41


0200400600800

1000120014001600

2014 2015 2016 2017 2018

Cost of Note Disposal (Million Naira)

YEAR2014 (₦‘ Million)

2015 (₦‘ Million)

2016 (₦‘Million)



% Change

(2017-2018)

VALUE 31.41 43.26 101.61 70.74 39.24 -44.53%

VOLUME 0.1042 0.1002 0.2425 0.3236 0.0599 -81.47%

1.15 COUNTERFEIT NOTES DISCOVERED

To maintain the integrity of the banknotes in circulation, the Department continued

to intensify its efforts at mitigating the incidences of counterfeiting activities in

collaboration with DMBs, BW PLC. and Security Agencies, during the period under

review. A total of 119,663 pieces of counterfeit notes with a nominal value of N98.82

million was recorded in 2018, indicating an increase of 1.30 percent in volume and an

increase of 5.77 percent in value, compared with 118,126 pieces with a nominal

value of N93.43 million recorded in 2017. The N500 and N1000 denominations were

the most commonly counterfeited banknotes, which accounted for 65.29 percent and

34.49 percent respectively of the total counterfeit notes.

The counterfeit notes recorded during the year under review were mostly from four

(4) sources, namely: Security Agencies, DMBs, CBN’s 24 processing centers and BWH

PLC. The ratio of counterfeit notes to volume of banknotes in circulation was 18

pieces per million, compared to 16 pieces per million banknotes discovered in 2017.

The increasing trend of counterfeiting of higher denomination banknotes

underscores the need for more concerted efforts in managing the risk. The Bank

would, however, sustain its publicity campaign, collaborative efforts with security

agencies and collation of data on counterfeits, to mitigate the incidences of

counterfeiting.The volume of counterfeit notes recorded asat the end of December 2018 was 119,663pieces, with a nominal value of N98.82million.


42

DENOMINATION (N) VOLUME (PIECES) VALUE (N) RATIO (%)

1000 78,133 78,133,000 65.29%

500 41,276 20,638,000 34.49%

200 242 47,800 0.20%

100 12 1,200 0.01%

50 0 - 0.00

20 0 - 0.00

10 0 - 0.00

5 0 - 0.00

TOTAL 119,663 98,820,000.00 100.00

Table 1.15.1: COUNTERFEIT NOTES DISCOVERED BY DENOMINATION IN VALUE: JANUARY-DECEMBER 2018

Table 1.15.2 RATIO OF COUNTERFEIT TO VOLUME OF BANKNOTES AND CIC (2017 & 2018)


43

Source: Currency Disposal Office/Planning and Logistics Office


Year Volume of Banknotes in CirculationRatio of

Counterfeit/Volume of Banknotes

(per million)

CIC Ratio of Counterfeit /CIC(per million)

Volume of Banknotes in circulation (Million)

CounterfeitCIC

(Million)Counterfeit

20166,691.90

120,869 18 8,691.63 120,869 14

20177,341.48

118,126.00 16 9,340.65 118,126.00 13

20186,769.90

119,663.00 18 9,256.63 119,663.00 13

2.0 CURRENCY OPERATIONS; OUTSOURCING POLICY2.1 OUTSOURCING OF THE MAINTENANCE OF CASH SORTING/

DISPOSAL EQUIPMENT

During the year under review, the Bank had a total of 106 Banknotes Processing

Systems (BPS 1000), 22 Currency Processing Systems (CPS 1800), 24 Banknotes

Destruction Systems (BDS 400) and four (4) Currency Disintegrating Systems (CDS

500). Of the 106 BPS machines Bank-wide, G+D Currency Technology Africa Limited

continued with the maintenance of 99 machines, excluding seven (7) BPS in Sokoto,

which were not covered by the Service Level Agreement (SLA), due to the

prolonged renovation of the Branch. Furthermore, 21 BPS under the SLA in Port

Harcourt, Abuja, Calabar and Owerri Branches were not effectively utilized due to

the ongoing renovations. Enclo Limited maintained six (6) CPS in five (5) locations of

the Bank. In addition, the maintenance of twenty-two (22) BDS by G + D Currency

Technology Africa Limited was sustained, while four (4) CDS were maintained by

Interprods Limited in the disposal centers, during the period under review.


44

3.0 CLEAN NOTE POLICY

To ensure integrity, maintain public confidence and the circulation of clean notes in

the economy, the Bank developed a Clean Note Policy and Banknote Fitness

Guidelines. The policy provides that newly printed and used banknotes should

conform to predefined currency management standards before circulation and re-

circulation respectively, in the economy.

The Banknote Fitness Guidelines provide the industry with clear and acceptable

criteria for determining the quality of banknotes in circulation. It provides guidelines

on how to identify fit and unfit banknotes and the various degradation levels of

banknotes, amongst others.

The two documents were produced by the Bank in collaboration with key industry

stakeholders, which included Cash-in-Transit Companies (CITs), Deposit Money Banks

(DMBs), Currency Processing Companies (CPCs) and other participants in the Nigerian

Cash Management Scheme (NCMS).

The Bank, in addition, sustained the clean note policy during the review period. This

entailed enlightenment focused on how cash users can identify the basic security

features, proper handling habits and the consequences of sale of the Naira, hoarding

and counterfeiting of the banknotes.


45

4.0 NIGERIAN CASH MANAGEMENT SCHEME (NCMS)

During the period under review, the Bank sustained its effort at the industrialization of cash

management in Nigeria. The Bank adopted the tiered pricing mechanism, aimed at

incentivizing DMBs to deposit lower denomination banknotes with CBN and forestall the

re-circulation of unfit banknotes.

The CBN’s Cash Activity Reporting Portal (CARP) application had gone live and teething

issues were being handled; thereafter, the Bank began to transmit data on its Currency

Management activities to NIBSS, the industry coordinator.

The updated Request for Proposal (RFP) in respect of the Integrated Cash Management

Platform was reviewed to ensure its conformity with contemporary technological

developments.

In furtherance of the Bank’s efforts towards ensuring the circulation of premium quality

banknotes, the Clean Note Policy & Banknotes Fitness Guidelines were developed in

collaboration with industry stakeholders under the NCMS. The Management of the Bank

approved the implementation of the two documents and penalties for infractions, during

the period under review.


46

5.0 INCOME AND EXPENDITURE PROFILE

5.1 INCOME PROFILE

The Department generated an income of N7,954.33 million from penal charges on

deposits of unsorted banknotes deposited by DMBs and charges for authentication of

foreign currency deposits with the Bank. The amount represented an increase of

N3,143.69 million compared with N4,810.64 million earned in 2017. The increase could

be attributable to the additional income earned from the authentication and processing

of foreign currency deposits by DMBs.


47

5.2 EXPENDITURE PROFILE

The Department expended a total of N73,582.90 million on currency operations in

2018, representing an increase of N16,550.34 million or 29.02 percent, compared

with N57,032.56 million in 2017. Of the total expenditure, N70,800.00 million or

96.22 percent was incurred on CIE recurrent, N2,708.23 million or 3.68 percent on CIE

capital and Non-CIE items accounted for the balance of N74.67 million or 0.10

percent. The CIE recurrent increased by N16,489.88 million or 30.36 percent,

compared with N54,310.12 million in 2017. This was due largely to an upsurge in the

volume of the indent and upward price review.

Further analysis of the CIE recurrent expenditure profile showed that the sum of

N64,040.78 million or 90.5 percent was spent on printing of banknotes, N5,630.03

million or 7.96 percent on air charter and the balance of N662.21 million or 1.27

percent on currency notes disposal, during the period under review. (Table 5.2.1 and

Figure 5.2.1)


48

Table 5.2.1: COD EXPENDITURE PROFILE (2017-2018)

2017 (N‘ MILLION) 2018 (N‘ MILLION) % Change

CIE RECURRENT 54,310.12 70,800.00 30.36

CIE CAPITAL 2,642.85 2,708.23 2.47

NON-CIE 79.59 74.67 (6.18)

TOTAL57,032.56 73,582.90 29.02

Figure 5.2.1: COD 2018 EXPENDITURE PROFILE (IN PERCENTAGE)

CIE RECURRENT

96.22%

CIE CAPITAL3.68%

NON-CIE0.10%

6.0 CURRENCY MUSEUM

The Currency Museum received 7,555 visitors in the year 2018. This indicated an

increase of 309 visitors or 4.26 percent, compared with 7,246 visitors in the year 2017.

The increase could be attributed to the impact of the School Enlightenment Programme

initiated by the Department during the period under review. The Department also

acquired 18 additional artefacts during the period under review, bringing the total to

1,926 objects as against 1,908 recorded at the end of December 2017. The conservation

of the artefacts, in collaboration with National Commission for Museums and

Monuments (NCMM), was sustained during the period under review to preserve them

from decay and deterioration.

The sum of N472,250.00 was generated from the sale of souvenirs in 2018, as against

N222,700.00 in 2017. This showed an increase of N249,550.00 or 112.06 percent which

was attributed to the introduction of new varieties. Furthermore, the Department

hosted the 2018 International Museum Day, with the theme “Hyper Connected

Museums: New Approaches, New Publics” on 15th May 2018 and commissioned a

temporary exhibition as the highlight of the occasion.

The theme of the temporary exhibition was “The Naira: Our National Pride” as a

replacement for “Counterfeit Money: Who Pays?” commissioned in 2014.


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7.0 ISSUES AND CHALLENGES

The Department was confronted with a number of operational challenges, which

included: sale of Naira notes; poor handling habits of banknotes by the public;

hoarding of the Naira and high cost of currency management. Other constraints were

rising incidences of counterfeiting of the higher denomination banknotes; public

apathy in the usage of coins; disposal of banknotes waste in an eco-unfriendly manner,

banknotes inter-leafing and other shortages discovered in the deposits of DMBs and

Bankers Warehouse.

8.0 PROSPECTS AND THE WAY FORWARD

To address the above challenges, the Department will sustain efforts to conduct

operational research and benchmark best practices to improve Currency Operations

Management. The Department will continue in its collaboration with security agencies

to mitigate the sale of Naira banknotes, through sting operations and other activities.

Furthermore, the Department will sustain its intervention in addressing the sub-

optimal circulation of lower denomination banknotes, through adequate supply and

distribution in collaboration with DMBs. Also, the recycling of banknotes waste to

reduce the carbon footprints will remain a major focus of the Department. To stem the

tide of sale of Naira notes, curb counterfeiting and poor handling of the Naira notes,

the Department will continue to strengthen its collaboration with relevant

stakeholders in the Harmonized Publicity Campaign and leverage the cashless policy.


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The Department has commenced the process for the establishment of a Currency

Laboratory to facilitate adjudication, banknotes evaluation and other tests for quality

improvement. The Department will continue to engage the NSPM PLC, to facilitate

timely delivery of the indent, liaise with the Bankers’ Committee and the Committee of

Heads of Bank Operations (CHBO) for DMBs to strengthen their internal control

mechanisms. This is with a view to minimize the incidences of shortages, deliberate

mutilation, inter-leafing and counterfeits discovered during currency processing.


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LIST OF ABBREVIATION AND ACRONYMS

AE Awaiting Examination BC Branch Controller BDC Bureau De Change BDC Banknotes Destruction System BOD Branch Operations Department BPE Bureau of Public Enterprises BPS Banknotes Processing System BWH Bankers Warehouse PLCCAC Counted and audited clean CAD Counted and audited dirtyCBN Central Bank of Nigeria CIT Cash-In-TransitCOD Currency Operations Department COG Committee on Governors CDS Currency Disintegration System CIC Currency In CirculationCIE Currency Issues Expenses CPDA Currency Processing and Disposal Assistant CPS Currency Processing SystemDMB Deposit Money BankEUR EuroFCT Federal Capital Territory FIFO First in First OutGBP Great Britain Pound G&D Giesecke & Devrient GDP Gross Domestic Product HRD Human Resources Department ICMS Integrated Cash Management Services ITD Information Technology Department LSD Legal Services Department MDA Ministries, Departments & Agencies MINT New Banknotes NCMS Nigerian Cash Management Scheme NSPM PLC Nigerian Security Printing and Minting PLC PROJECT CURE Currency Restructuring Exercise OVI Optical Variable InkOBIS Optical Banknote Inspection System PTA Personal Travelling Allowance RMD Risk Management DepartmentSAR TC Saudi Riyal Travelers ChequesSSD Security Services Department SLA Service Level Agreement TE Time Expired USD United States Dollar

REFERENCES Inputs from Offices in Currency Operations DepartmentGDP Data From Statistics Department, Central Bank of Nigeria, Abuja.


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2018 ANNUAL REPORT - Central Bank of Nigeria COD Annual... · 2019-10-15 · pieces of ₦500...

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